New York PSC Approves New Baseload Service Component Under Daily Delivery Service Program Applicable To Marketers At ConEd
October 23, 2018Email This StoryCopyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC approved natural gas tariff filings at Consolidated Edison Company of New York, Inc. (Con Edison or the Company) to establish a Baseload Service under its Daily Delivery Service (DDS) Program, to become effective on November 1, 2018.

The PSC noted that gas marketers that serve firm transportation customers on Con Edison’s gas system are required to take service under the existing DDS Program, which allows marketers to receive allocations of the Company’s pipeline capacity, storage, and peaking supply assets that are necessary to serve all firm customers. Currently, the DDS Program consists of three tiers: Mandatory Capacity Release (Tier 1), Managed Supply (Tier 2, subdivided into Tier 2(a) – Virtual Storage and Tier 2(b) Physical Storage), and Peaking (Tier 3). Due to increased customer demand for gas during the Winter periods (i.e. November through March), the Company has relied on Delivered Services for the necessary peaking assets to supply gas to firm customers. Because the unavailability of pipeline capacity and the increase in firm customers’ demand is expected to continue throughout the coming winter periods, Con Edison is purchasing a portion of Delivered Services as a baseload supply to be utilized before using other gas supply assets

With this tariff filing, Con Edison is proposing to allocate a portion of the contracted quantities and associated costs of its baseload Delivered Services to marketers serving firm transportation customers. Specifically, Con Edison proposes to add a Baseload Service component to its DDS Program and implement the necessary program changes and tariff modifications to properly allocate a share of the new baseload supply and associated costs among firm sales and transportation customers.

The proposed Baseload Service would be a bundled supply service delivered to the Company’s city gates for the months of December through February. During this period, gas marketers would be allocated shares of the Company’s baseload supplies. The Company proposes to allocate a share of the baseload delivered supplies to all gas marketers serving firm transportation customers based on the ratio of the firm transportation customers’ annual usage as a percentage of total firm customers’ annual usage applied to the forecasted design-day peak capacity. The Company then proposes to allocate to each individual marketer their share of the baseload delivered supplies by multiplying the marketers’ share of the Company’s total Baseload Service assets times the ratio of the marketer’s Slope Component to the total of all marketers’ Slope Components.

Prior to the start of each month, the Company would determine the amount of Baseload Service to be provided to each marketer. The marketer’s Baseload Service quantity would be applied to the marketer’s daily deliveries to its customers first, before any quantities from Tiers 1, 2, or 3 of DDS are utilized, and must be used in full by the marketer in each of the three peak winter months (December through February).

Con Edison would determine the commodity price for Baseload Service and charge the marketer a monthly rate, which will be published in the Company’s Statement of Balancing Service Charges. The Company proposes to create a bundled commodity rate for the Baseload Service that will recover the commodity cost incurred by the Company for baseload supplies. The rate stated in dollars per dekatherm will be determined each month by adding the NYMEX settlement price for the month of flow and a weighted average of the contracted basis (basis is a proxy for the cost of delivery to a specific point) for city gates, with the weighting based on the quantity of Baseload Service delivered at each of the city gates. The Baseload Service will be delivered to these city gates: Tennessee – White Plains, Enbridge – Lower Manhattan, Iroquois Zone 2, and Transco – Zone 6 NY.

Con Edison also proposes a clarifying revision to its Gas Cost Factor Provision for housekeeping purposes stating that any revenues resulting from the Winter Bundled Sales Service (WBSS) Program, used to offset the cost of gas, will be for service rendered prior to March 1, 2017, since WBSS was discontinued as of that date. Con Edison complied with the requirements of Public Service Law §66(12)(b) and 16 NYCRR §720-8.1 regarding newspaper publication.

The PSC noted that Con Edison continues to increase its reliance on Delivered Services to meet the forecast demand requirements and pipeline capacity needs of its firm sales and transportation customers. The Company is now purchasing a portion of delivered services, from what has typically been solely used for peak day gas demand needs, as a daily baseload supply for the three coldest months of the winter as a reliability measure. Currently, the allocated share of baseload supply and associated costs for firm sales customers are recovered through the Company’s existing Gas Cost Factor. However, a mechanism to allocate the appropriate remaining share and costs to marketers serving firm transportation customers does not exist. Under the current DDS program, the Company is only able to provide a share of the Delivered Services and associated costs as a peaking supply under Tier 3 of the DDS program.

In approving the tariff changes, the PSC said that, "The proposed tariff revisions appropriately allocate a share of the new baseload supply and associated costs among firm sales and transportation customers and are hereby approved. The proposed method to allocate the marketers’ share of baseload supply is appropriate and consistent with how other assets are shared within the DDS program. The proposed tariff modifications will allow the Company to appropriately allocate the portion of Delivered Services being used for daily baseload supply of firm transportation customers to the marketers serving them and provides a mechanism to collect the associated costs in a fair and equitable manor among all firm customers."

"The proposed pricing mechanism should provide additional price stability of gas costs among all firm customers due to the use of a monthly pricing mechanism for the month of flow, rather than using a daily market price index. Furthermore, the prescribed city gate locations being used for the Baseload Service provide further reliability due to the nature of the primary point capacity that the Delivered Services must provide at the listed Company city gates and reduces reliance on a sole pipeline," the PSC said

"Finally, Con Edison’s proposed clarifying revision to its Gas Cost Factor Provision regarding the WBSS Program is of a housekeeping nature and is also approved," the PSC said